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Hi Kim,
The scenario details about the composition of its board with 4 EDs and 4 NEDs excluding the chairman.
The corporate governance principles however suggests that majority of the directors in the board should be NEDs. The answer suggested that all dorectors in audit committee shoudl be NEDs.
My confusion is we are talking about board or audit committee in the question and whether it should be majority of NEDs or all should be NEDs.Thanking you in advance.
PoonamThe BOARD (of directors) should be balanced – both execs (with the day-to-day responsibilities) and non-execs (to “challenge” the execs and provide independent oversight).
Look at the roles of the audit committee on page 14 of the notes – it must be made up of NEDs. The finance director (or other directors) might be invited to committee meetings but cannot be a member of the committee – i.e. does not have a right to attend audit committee meetings – that would compromise/threaten the committee’s review/monitoring roles relating to internal control/audit and the integrity of the financial statements.
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